Shell planning for new wells in Moffat, Routt counties

Quotable

“These (new wells) are going to be a little more widespread. We initially wanted to focus around the existing field, which makes sense because you know it’s working, but what we are going to do now is spread out our wells to cover different geological settings.”

— Matt Holman, Shell exploration manager for Northwest Colorado

Representatives from Shell Oil Company quashed rumors the energy production giant has plans to buy a hotel in Craig for its employees exploring the Niobrara Formation.

“I can honestly deny that rumor. Shell has no interest in buying a hotel,” Holman said. “There are a lot of other uses for a hotel than catering to Shell and we wouldn’t want to get in the way of other revenue opportunities like hunting, for example.”

Holman said Shell has acquired the necessary land leases to construct temporary residences near its base of operations in the Hamilton and Waddle Creek areas.

But Holman would not comment on whether Shell has plans to construct a “man camp” in the immediate future.

“We do like to plan for all contingencies,” Holman said. “But, we’re too early into the play to know if we’re going to be here long term or not.”

The idea of Shell building temporary residences has some county officials concerned.

Moffat County Commissioner Tom Mathers said his interactions with Shell representatives have been less than candid.

“First they told us they were going to use our hotels, then they said they were thinking about building this man camp,” Mathers said. “I wish they would just be honest with us and tell us what their plans are because we want them here and we want to work with them.”

As a bar owner, Mathers fears temporary residences would result in a missed opportunity for his and other businesses to capitalize off the influx of Shell workers coming to the area.

Holman concedes housing employees in local hotels would generate revenue and likely boost city and county sales taxes, but he said the temporary residences aren’t a certainty moving forward.

“If you’re centralized, then you need food, which would mean hiring local caterers,” Holman said. “And (Temporary Living Quarters) shouldn’t necessarily be seen as a negative thing because it would require the construction of some infrastructure, which would be a sign that we are going to be there for a while.”

And how long Shell plans to explore the Niobrara depends on its success this year, Holman said.

According to plans, Shell expects to drill 11 new wells this year, eight in Moffat County and three in Routt County.

The initial idea for Moffat County was to define the Waddle Creek and Harper Hill field, but Holman said those plans have been altered.

“These (new wells) are going to be a little more widespread,” Holman said. “We initially wanted to focus around the existing field, which makes sense because you know it’s working, but what we are going to do now is spread out our wells to cover different geological settings.”

Since Shell employees arrived in Moffat County, representatives have said the company has no plans to frack in the Niobrara. Although that continues to hold true for the company’s 2012 drilling schedule, Holman said Shell may begin implementing the practice next year.

“Generally speaking, we won’t be fracking as a routine practice this year,” Holman said. “As you know, our competitors are out there fracking every well. We have a different model in mind, but our competitors could be right or we could be right.

“Initially the thought was if we don’t have to frack, then we won’t. It’s expensive and people have a lot of concerns about it. But, if the opportunity arises to test a technical concept like that in one of our well bores we may choose to do that.”

Holman said the company’s intention is to be deliberate and transparent with the public regarding its activity.

Holman said Shell acquired office space last year at 555 Breeze St., and intends to keep it staffed with company employees while drilling operations are underway.

In addition, Holman said Shell plans to host an open house in Craig, as it did a few weeks ago in Hayden, when wells begin to “spud,” possibly around May 15.

“Hayden is a nice midway point between our operations, but everyone understands the bulk of our operations are going to be taking place in and around Craig,” Holman said. “When our rigs begin showing up we need to meet with the community to tell them what we’re doing, where we’re doing it and why.”

Although no date has been officially set, Holman anticipates the open house in Craig will take place sometime during the first or second week of May.